House prices and the economy Latest Topicshttps://www.housepricecrash.co.uk/forum/index.php?/forum/22-house-prices-and-the-economy/House prices and the economy Latest TopicsenBrexit What Happens Next Thread ---multiple merged threads.https://www.housepricecrash.co.uk/forum/index.php?/topic/210294-brexit-what-happens-next-thread-multiple-merged-threads/
So we left what happens next.

The EU abandons its free movement of people policy and the UK has another referendum?

We adopt a norweign style arrangement?

Many possibilities.

Discuss!

]]>210294Fri, 24 Jun 2016 04:12:32 +0000It's always the poor mortgaged homeowner, f*** the 2nd or 3rd class renterhttps://www.housepricecrash.co.uk/forum/index.php?/topic/233895-its-always-the-poor-mortgaged-homeowner-f-the-2nd-or-3rd-class-renter/
Yet again something happened today that really gets my goat, a news story, event or it could be in general conversation, it's when somethings happens that effects many people with various degrees and yet those that are "homeowners" or even worse "hard working homeowners" get the majority of the sympathy.

Was listening to a story in the media today about a huge rubbish mountain that is taking up acres of field space, it's all wrapped up in bale size blocks using plastic and was supposed to be got rid of by a Chinese company that screwed up. It is un sightly and now starting to stink as well as spoiling the country views, but who does the media feel sympathy for? "Homeowners worried their house value might drop".

Is their anyone else that gets sick of this, jobs could be about to be lost, interest rates going up, FTSE falls, and everytime it's the hardworking mortgaged homeowner that we need to be concerned about, renters can get to f***.

]]>234014Fri, 22 Feb 2019 08:38:56 +0000Are some HTBers planning to sell after the 5 year period?https://www.housepricecrash.co.uk/forum/index.php?/topic/234013-are-some-htbers-planning-to-sell-after-the-5-year-period/
Ealier in the HPI shilling Evening Standard I saw an article about a couple who recently bought a flat in Central London and were really pleased that their mortgage reypayments are the same as their previous rent. At the end of the article the issue of paying the interst on the government loan was raised. The man from the couple said that they plan to sell at the 5 year point because he thinks prices will go up. So they are using HTB as a house flipping tool.

THE West Australian property market is being decimated following the evaporation of the resources boom, with values of $1 million-plus properties plummeting 20 per cent and the equivalent of more than two years' supply of homes flooding real estate agencies.

In Geraldton, rents have slumped 8 per cent and in the state's northwest fibro shacks that had been fetching rents of $1000 a week are sitting vacant as formerly high-paid mining executives face widespread retrenchment.

Real Estate Institute of Western Australia deputy president David Airey said there had been just 85 sales in Perth's affluent western suburbs in the three months to December, down from 150 the previous quarter and 300 at the same time in 2007. "Properties ... purchased as recently as a year ago have been listed or sold below their original asking price," he said.

Mr Airey said house prices in the state were expected to fall further as the global financial crisis continued to unfold and mining companies retrenched staff.

Adviser Edge head of property research Louis Christopher said Perth house prices were expected to fall by between 8 per cent and 12 per cent this year.

"The cause of the falls at the moment is the decline in commodity prices, (the rise in) which is what actually caused the boom in the first place," he said.

According to the REIWA, much of the lower end of the market was holding ground, buoyed by a surge in people capitalising on cheaper homes and a tripling of the first-home buyers grant.

"Properties priced up to $400,000 in areas popular with first-home buyers have either been steady in price or fallen only very very marginally."

In Perth, house prices fell 4per cent in the December quarter, taking the yearly decline to 11 per cent.

The median price of a Perth house was $418,000, down from $473,000 at the peak of the West Australian housing boom in December 2007.

AUSTRALIA will go into recession this year with a budget that's "buggered", forcing Canberra to choose between its infrastructure priorities and more populist middle-class welfare and industry bailouts.

<script type="text/javascript"> // Leading economic forecaster Access Economics warns in its quarterly Business Outlook, released today, that the nation's economic boom will "unwind scarily fast", halving corporate profits, costing more than 300,000 people their jobs and blowing out the current account deficit to more than $100 billion.

"Batten the hatches. This is not just a recession. This is the sharpest deceleration Australia's economy has ever seen," the report says.

Thanks to China's growth, Australia last year escaped the recessions that sent major economies such as the US and Britain into reverse.

]]>101429Mon, 19 Jan 2009 01:29:12 +0000Councils getting into BTLhttps://www.housepricecrash.co.uk/forum/index.php?/topic/234011-councils-getting-into-btl/
In the financial year 2017-18 councils in England and Wales invested about £4bn in property and land - up 43% on the previous year.

Spelthorne Borough Council has pioneered the use of cheap government-backed loans to amass a property portfolio worth £1bn which it expects to generation millions in rental income over the next year. grants is one that has been investing in this way.

Leader Councillor Ian Harvey told Wake up to Money why.

"Very simply we've been facing very significant cuts to our central government grants and and indeed grants from... Surrey Council Council."

He reckoned over the last 4-5 years that amounts to a cut of about £5m or about 20% of the council's total budget.

"Had we not looked to do something else we would have been facing very, very severe cuts to our services and we believe our residents want and deserve the services that we currently supply."

Using government loans to buy houses and rent them out , to subsidise their income

]]>234011Thu, 21 Feb 2019 06:36:53 +0000Btl Scum Regrouping And On The Offensive. -- Mergedhttps://www.housepricecrash.co.uk/forum/index.php?/topic/205642-btl-scum-regrouping-and-on-the-offensive-merged/They are not going down without a fight, they are running scared.

I have been a Conservative voter for my whole life and have used the influence of my property forum and blogs (200,000 subscribers) to encourage my peers to vote the same way.

I would very much like to meet with you to discuss my concerns regarding the budget, in particular the impact on lending institutions and a hardcore of Conservative voters who invest into buy-to-let property. I believe the impact is far more wide reaching than may have been considered and could well lead to another banking crisis, as I will go on to explain below.

My understanding of the logic behind the budget announcement is to reduce incentive for highly geared buy to let transactions, which the Bank of England recently reported to be a risk to the economy. I broadly agree with that. However, the consequences of the budget are that an established private landlord using a high gearing business model could now end up falling into the 45% tax bracket even if his rental portfolio is only breaking even and even if he has little or no other income or resources with which to service that increased tax burden. Please see the example below:-

Net cashflow is still zero but tax is payable on £200,000 less a tax credit of £40,000 due to the 20% relief on the £200,000 of mortgage interest.

Given that net cashflow is zero, where is the landlord expected to find the money to pay the extra tax from?

The position worsens when interest rates increase.

It gets worse!

Until now, buy-to-let mortgage underwriting and associated lending criteria has been based on the current tax system, which has not made provision for this extra tax. Many thousands of established professional landlords have based their business models on the current tax system and lending criteria. If these landlords are now allowed to fail we could be looking at another credit crisis, plus of course a further negative impact on the housing crisis..

Worse still

General consensus is that highly geared landlords will be able to pay down their debt by selling some of their properties. However, the very nature of a highly geared property investment strategy means that in several cases the net sale proceeds would be insufficient to pay CGT due to outstanding mortgage liabilities having significantly exceeded the original purchase price of assets due to refinancing in line with property values during the property boom which has occurred since the early/mid 90’s. There is no CGT rollover relief available to private landlords on residential property so they cannot convert to a corporate structure either without incurring CGT. Accordingly, many are trapped into an inevitable bankruptcy scenario by the budget announcements. The net losers (in addition to these landlords) will be the banks and society as a whole due to the losses incurred on forced sales, the reducing supply of quality rental property and the associated demand led rental inflation.

The Chancellor said that he wishes to make it easier for people to become homeowners. A significant exodus from the Private Rental Sector may well facilitate this in terms of reducing property values but it will not create any more housing. In fact, it may well reduce incentive to develop new housing. This is because over the last two decades a significant proportion of new build housing stock has been purchased by landlords, thus driving up the profits of developers to a point where it makes developing new builds viable. A reduction in the appetite for buy-to-let investment, combined with a reduction in property prices, may well have the effect of reducing property developer profits, and hence incentive to build new homes. Another knock on consequence of this is that a reduction in new developments would result in less new social housing being built.

My suggestions

It would be politically very awkward for the Chancellor to do a u-turn at this point, albeit not impossible. However, the following concessions may be equally effective to deal with the Chancellors objectives whilst negating the necessity to openly backtrack in order to avoid the negative repercussions and unintended consequences of the Summer 2015 Budget:-

Option 1) announce that the new tax rules only apply to new debt as of 2017 or

Option 2) introduce CGT rollover for residential investment property in order to allow landlords with large portfolio’s to roll their assets into a corporate structure or

Option 3) declare a CGT amnesty for BTL landlords for a given period which will still have the effect of reducing the size of the PRS (albeit with some reduction in property values due to the possible scale of transactions) but with reduced negative consequences in terms of insolvency induced forced sales and the knock on effects to banks and property developers.

I look forward to your reply and hope we can schedule a meeting sooner rather than later.

Yours sincerely

]]>205642Thu, 16 Jul 2015 21:52:44 +0000Immigration: the house price elephant in the roomhttps://www.housepricecrash.co.uk/forum/index.php?/topic/234007-immigration-the-house-price-elephant-in-the-room/
This is from the Spectator Australia and I might have followed the link from someone on here (sorry if posted already). What I think is interesting is that immigration is not really allowed to be mentioned in relation to house prices in the UK either but it stands to reason that a resource that everyone needs/wants will go up in value the more people there are to need/want it. Right?

Australia actually seems far more addicted to the temporary uplift that inward migration yields. How long can it go on? I would have liked some citations in the opinion piece though.

It speaks to the shallowness of Australian democracy that the obvious is now very seldom spoken. A wide range of economic and social issues are now encased in thick plaques of unreality that result in serious policy discussion rarely being entertained. This is particularly true of immigration and its impact on house prices.

Property industry consultants, economists and building industry advocates are loath to mention the simple fact that immigration drives up house prices. The straightforward notion that directly increasing the demand for housing, by deliberating expanding the number of people looking for housing, is apparently beyond their capacity to admit publicly.

The reticence to concede basic economics is a function of Australia’s stifling business and political culture. Housing sector lobbyists and property analysts are bought and paid for by the construction industry, so they are effectively paid to keep quiet. Market economists on the other hand are afraid to appear anti-immigrant for fear of alienating the corporate sector and incurring the wrath of progressive politicians.

Very limited pockets of independent thought do occasionally allow the obvious to be mentioned, but even then, it’s only in passing and without serious examination. An honest and complete exploration of the effects of immigration on housing prices would quantify its impact and facilitate our understanding of an obvious policy lever for alleviating the housing affordability crisis currently being experienced in Sydney and across the continent.

The bottom-line is that conservatives in Australia are orphaned intellectually. There is no voice of reason to examine the obvious case for dramatically lowering the immigration intake to address the housing affordability crisis.

The policy issue, of course, centres on how large an impact immigration has had on house prices. This is where economists should come into their own and offer deeper insights into the trade-offs between housing affordability and stronger population growth driven by immigration policy. The fact that, with some notable exceptions, economists haven’t made a significant contribution to the debate speaks to the desperate state of the policy environment.

The economic literature on the topic all points to a positive relationship between population growth and house prices. There are varying estimates of the elasticity of house prices with respect to population growth from studies across the globe, each reflecting different domestic conditions. Despite occupying an entire continent, Australia is one of the most highly urbanised countries in the world and constraints on development in our cities limits the ability for new supply to moderate demand pressures on housing markets.

Closer to home, an economist at the Reserve Bank of New Zealand has estimated that for every one percent increase in the population across the ditch there will be an eight percent rise in house prices over the next three years. The estimated effect is large and immigration alone in New Zealand over the last five years led to a more than five percent increase in the population.

House prices have skyrocketed in New Zealand as a result and Auckland now ranks fourth in the list of least affordable housing markets in the world. It’s not hard to see why the conservative government of Bill English lost power in the face of a Labour Party committed to reducing immigration numbers, however phony those election promises.

While there’s a dearth of literature in the Australian case we can take guidance from a range of sources. Australia is a much larger country than New Zealand, so what appears to be a greater responsiveness of supply should ease the pressure on house prices, suggesting a lower estimate. International estimates of the elasticity of house prices with respect to population also tend to be lower than the estimate for New Zealand.

One economist has told me privately that using conventional econometric techniques it is relatively straight-forward to show that the long-run elasticity of house prices with respect to population growth is somewhere between two and three. When asked why he hadn’t published his finding or drawn attention to their policy implications, he ominously stated “career implications”.

Immigration is one of the key drivers of house prices in Australia. Politicians from both major parties have pushed one of the world’s largest immigration programs on the Australian people for a generation with the effect of pricing many of them out of the housing market.

This is particularly tragic for our young people, many of whom now consider home ownership an unattainable goal. Young couples have clearly deferred starting families to instead save for a deposit on a home. These impacts of housing affordability have fed directly through to rental markets. Anyone trying to rent in Sydney knows it’s an absolute nightmare and life is constantly disrupted by a game of musical apartments as leases come due.

It’s not as though both major political parties didn’t know this either. Treasury will have told all the cabinet ministers in the current government that immigration increases house prices; they’ve just been too craven to admit the fact to the electorate publicly.

A stale and intolerant political class has insisted that the public can not be allowed to know the truth for fear of undermining support for an immigration program that no one really asked for in the first place and, had they been given the option at the ballot box, would have been roundly rejected.

This is not a feature of our democracy that serves us well, or that should inspire trust in our politicians. The harsh thought policing of public discussion around the issue of immigration has been extreme and speaks to the shallowness of policy debate.

Australians now have a generational opportunity to break the intellectual stranglehold of a failed political elite. Only honest debate and the courage to stare down vested interests will make us capable of moving policy in a positive direction. Dramatically reducing immigration is necessary to ease pressure on housing markets and that alone, as a fundamental component of a conservative policy platform, dramatically sets us apart from the major political parties.

]]>234007Wed, 20 Feb 2019 16:26:26 +0000We Are Facing Another Global Financial Crisis Of Epic Proportionshttps://www.housepricecrash.co.uk/forum/index.php?/topic/206092-we-are-facing-another-global-financial-crisis-of-epic-proportions/We are on the precipice of another major global financial crisis of epic proportions and asset price bubbles all across the world, including the UK property bubble, are extremely vulnerable. As the crisis worsens in the next few month the London property bubble - as one of the most over inflated property bubbles on the entire globe - will finally implode with some major implication to the UK property market as a whole.

The signs of a global economy reaching the tipping point are becoming louder, more frequent and more severe:

* commodities have plummeted to lows not seen since 2002

* global shipping indices are dropping with negative year on year movements of up to 20%

* the oil price, as a gauge of global economic activity, is reaching lows not seen since the depth of the crisis of 2008/2009

* key exporting nations are in deep trouble including Australia, Canada, Brazil and much of the rest of South America

* consumer spending in the US, the key driver of US GDP, is contracting and major retail outlets are in trouble.

* the Dow, the S&P 500 and the Russell 2000 are barely propped up by a few big players. The vast majority of publicly listed stocks in the US are in steep decline.

* the Chinese economy is in deep trouble with year on year exports as well as imports in negative

* after the RMB devaluation the global currency wars stepped up another notch and now the EM currencies such as the Malaysian Ringgit and the Turkish Lira are in free fall. These shifts in the FX market could easily spiral into another currency crisis such as experienced in Asia in the lat 1990s.

* the RMB devaluation effectively means that China is exporting deflation to importing nations such as the US and the UK

* the Fed and the BoE are stuck between a rock and a hard place. If they raise rates they will strengthen the USD and GBP creating even more deflation. If they maintain interest rates or even lower rates they will have lost all credibility. After the SNB fiasco in the beginning of the year, trust in central banks will hit rock bottom and the central banking system is likely to unravel further.

* EMs and developed nations are facing a mountain of debt facilitated by the Fed's cheap money policy. The unwind in global credit facilities will unleash further havoc in the markets. I could go on ...

Under the conditions described above, asset price bubbles such as in equities, bonds and property are destined to implode. In the UK, the effects of the deteriorating global economy are already visible in the prime London property market with LSL Acad HPI reporting a staggering 18.6% year on year drop in the City of Westminster. Sales in this particular market are at rock bottom and will effectively halt within the next few months as the above conditions worsen. In the meantime London property developers are sitting on around 54.000 luxury flats coming on the market as reported by the FT in February this year. The subsequent supply glut can already be seen in prime postcodes such as SW8 and, more recently, SW1E. The panic in this particular segment of the market has already begun with more and more flats coming on the market with very few being sold, let alone being sold at asking price.

The forthcoming global financial crisis will be of epic proportions. Unlike in 2008/09, the central banks have no more ammo in their arsenal to prop up the markets. The UK property market, and the London property market in particular, will see a downtown not seen in a generation. Get ready and be prepared.

By 2023-24, the proportion of children living in relative poverty is on course to hit 37%

While weak productivity and pay freezes were holding back living standards for most people, government policy was also hitting more deprived groups. The report noted the final year of the benefit freeze, which will reduce working-age household incomes by £1.5bn, will start in April, while the impact of the two-child limit on benefits will grow over the remainder of this parliament.

This is having a direct impact on child poverty, said the report, which has been increasing continuously since 2011. It predicts that by 2023-24 the proportion of children living in relative poverty (after housing costs) is on course to hit 37% – exceeding the previous record high of 34% in the early 1990s. This could mean an extra 1 million children living in poverty in the next five years, it said.

Our tragic child poverty in the news again and the line about increasing since 2011 struck me. Austerity measures started in 2008, so perhaps there was a 3 year lag. What else could account for the rise?

The house price graph doesn't really correlate either, big upward trend only kicking in 2013. But poor people don't buy houses so the important stats are private rents and social rents. For the life of me I can't find any decent graphs to show increases. (I'm not proficient at googling.) ONS shows it's gone up but there's no big change, just a steady rise. I can't find a social rents graph at all.

Looking at inflation it seems as if it went down since 2011 so that's not relevant. Salaries has slowly increased as well.

Child poverty is much higher in some ethnic minority groups than in the rest of the population. Over 40% of Bangladeshi and Pakistani children are growing up in poverty, compared to 31% of Chinese, 22% of Black Caribbean and 15% of children in the white majority population.

I can't help but conclude that we've benefitted from the cheap labour of ethnic minorities while their children languish in permanent poverty. Any other ideas how this situation has come about? The 2 child limit for benefit will have had a large impact I'm sure.

First-time buyers are now the driving force in the housing market, making more purchases last year than at any point since 2006 as a slowdown in prices opens a window to get onto the property ladder.

It is also the first time since 1995 that first-time buyers have been responsible for more transactions than existing homeowners moving house.

It comes as house prices have slowed down even as buyers benefit from rising wages and still-low interest rates.

As a result increasing numbers of aspiring owners have taken advantage of the pause in the market to take their first step onto the ladder.

Quote

The average buyer took on a mortgage with a deposit of just 15pc, the smallest proportion since 2008. Before the crisis struck borrowers routinely took mortgages with a 10pc deposit or less, a practice that has largely ended since the crash.

But smaller deposits are making a comeback.

Loans are also growing compared to incomes, with the median mortgage worth 3.64 times the borrower’s annual income - a record high, up from 3.27 times a decade ago.

Yet despite the size of the loans, monthly repayments have fallen dramatically.

The average first-time buyer’s combined capital and interest payment is less than one-fifth of their income, down from almost one-quarter in 2008.

"Councillor Jackie Whiteley (Cons, Wharfedale) was one of the objectors, and also questioned the sustainability of the site. She said: “There is a lack of infrastructure. People in the village will be affected by inadequate drainage and sewage. There are train links to Leeds and Bradford, but the Bradford trains are never full, showing there are probably few jobs in Bradford that can pay the mortgages for the houses people in Menston live in. The station car park is also inadequate.""

MPC member Gertjan Vlieghe said "a lot needs to go right" in the UK and world economies for his prediction of one interest rate hike per year to come true

]]>233994Sat, 16 Feb 2019 22:48:43 +0000I think the wait is overhttps://www.housepricecrash.co.uk/forum/index.php?/topic/233959-i-think-the-wait-is-over/
I have been waiting 6 years to buy, come close a couple of times out of desperation, pressure from others around me etc same as many on here. I follow West London and parts of the south. I know variety of people from all different backgrounds, amongst them, an estate agent, couple of developers, first time buyers, landlords, affluent individuals, help to buy owners, business owners, sellers, professionals of all types etc. I really think from everything I see, read and hear this next 12 months is going to be brutal. Many are talking negative now, no longer the uber upbeat tone of a couple of years ago. I have said on here for a while the crash started long ago and I personally think it is now clear it did (London & south only, I know nothing about the market in the north of the country). Sentiment has been turning, prices dropping, properties not selling/renting etc but it has been gradual. I’m calling it now, this time next year I think the market will be decimated. I know of someone selling land to a developer, a big deal, they have backed out on him. I know someone who was flipping a house, been holding it 2 years from purchase now and just coming to terms with the fact they are going to loose 100k plus and that’s after doing a complete renovation and a loft conversion. I know someone else, tight as two coats of paint, just took a 200k drop to get a sale through on one of his properties, very out of character, but he is a right time right place kinda guy and I’ve no doubt that will look shrewd in time (he still made a killing). I could go on and on but the point is the tide has turned and it’s now common knowledge. Those who kept saying buy buy buy have fallen silent. We are now in reverse and I think it is going to pick up speed. Redundancies are becoming more common, closures happing all over the place, Brexit, S24 all ready to add to the doom.

I was speaking with the estate agent I know the other day and he said it’s not only buyers on the sidelines, he has plenty of potential sellers too. Many of whom get valuations done only to inform him after they won’t be marketing the property until post Brexit. I think once it is done whatever the outcome a lot more properties will come on and hopefully sellers will out number buyers and it will trigger the collapse. I am sure someone will repost this if I am wrong, I even will if I remember but I can feel it, this is different! The next 12 months is going to be a bit tasty.

I won’t be taking out any more fixed isa’s etc I want my funds accessible now.

2R

]]>233959Tue, 05 Feb 2019 20:48:02 +0000Jacob Rees-Mogg comments on concentration campshttps://www.housepricecrash.co.uk/forum/index.php?/topic/233997-jacob-rees-mogg-comments-on-concentration-camps/
Conservative MP Jacob-Rees Mogg has compared the death rate in Boer War concentration camps to the death rate in Glasgow at the time.

Death rates in British concentration camps: "In all, about one in four (25 percent)of the Boer inmates, mostly children, died."

Death rates in Glasgow via the Herald"Glasgow, in 1901, had a population of 762,000 and, according to the National Records of Scotland, 16,190 people died. That dropped slightly to 15,530 in 1902." Taken over 3 years that amounts to a death rate of 6%

Remember the days when we had politicians who at least had some idea what they were talking about.

I guess even if he losses, the other candidates will lurch significantly to the left in order to "compete" with him.

]]>234001Tue, 19 Feb 2019 14:26:30 +0000Time to buy Purple Bricks shares?https://www.housepricecrash.co.uk/forum/index.php?/topic/230753-time-to-buy-purple-bricks-shares/
Happy for the more experienced share-dealers to shoot me down in flames, however does now not seem a potentially good time to invest in this company?

In the shorter term stagnating transactions and poor affordability currently suggest that in future transaction numbers should increase (more business for all) and if prices fall sellers will likely be looking to limit their sales costs further (a greater market share for cheaper alternatives to traditional agents).

In the longer term it looks like the house-selling model is going the same way as much of retail already has - from bricks and mortar to more cost-competitive online services. Anecdotally I've seen two or three properties come to market locally with Purple Bricks, while previously there had been none that I can remember.

A shrewd longish term buy perhaps?
]]>230753Mon, 31 Jul 2017 10:48:58 +0000European Medicines Agency in High Court fight with Canary Wharf over Brexit movehttps://www.housepricecrash.co.uk/forum/index.php?/topic/233914-european-medicines-agency-in-high-court-fight-with-canary-wharf-over-brexit-move/
A major European Union agency currently based in Tower Hamlets is fighting a High Court battle against Canary Wharf in a bid to use Brexit to get out of an estimated £500 million bill.

Tenants and others who found unusual ways to keep a roof over their head in an era of record costs

Renting a property in the UK can be a bleak business. The average monthly rent rose to £932 last month and in London it is even more expensive at £1,588, according to new figures. It is of little surprise then that more young people are choosing to stay in the family home. Recent research showed nearly a million more young adults live with their parents than was the case two decades ago. The proportion of people aged 20 to 34 who live with their parents has risen from 19% in 1997 to 25% in 2017 – some 3.4 million people, according to the thinktank Civitas.

With spiralling rents leaving many people with barely any disposable income, let alone the means to save towards a deposit, some are now choosing alternatives.